Answer: The expected value of a ticket is - $0.625
Explanation: The expected value is calculated as:
E = ∑pₙxₙ
where pₙ is the probability that the event xₙ occurs.
We have 3 events, first place, where x = $99 and p = 1/1000, second place, where x = $49 and the probability is 5/1000 and the ones that dont win nothing, where x= -$1 and the probability is 996/1000
where i used 99$ and 49$ for the prices because i am discounting the $1 for the ticket.
then the expected value is:
E = ($99 + 5*$49 - 996*$1)/1000 = - $0.625
wich means that in average you lose money in this game
